Persistent Systems confident of bagging two more large deals; margins not a worry: CFO, Vinit Teredesa

Mid-sized IT services firm Persistent Systems is optimistic about sealing two additional significant contracts, in addition to the recently secured $650-million six-year agreement in the second quarter of FY27, disclosed a senior official on Monday. CFO Vinit Teredesai disclosed to PTI that the company had onboarded approximately 1,100 staff members during the June quarter, anticipating the workload from these large contracts. Consequently, overall utilisation levels dropped to 86.5% by the end of June from 88% in March.

Investor apprehensions regarding profit margins were addressed by Teredesai, who assured that there are "no concerns" in this aspect. The company aims to maintain a pre-tax margin of 16-17% as previously estimated, despite anticipated wage hikes from July, which could cause a two percentage point drop. He explained the margin compression in the June quarter, attributing the decrease in operating profit margin to an increase in headcount to 28,640 employees, resulting in lower utilisation.

The net profit margin was further affected by volatile currency movements, reducing it to 11.2%. Despite these challenges, Teredesai expressed confidence in the company's financial trajectory, noting that the $650-million deal already generating revenues will intensify in Q2 and Q3. He anticipates signing two more large contracts in Q2 and confirmed ongoing negotiations for a mixed-currency long-term financing arrangement to fund the Euro 1.27 billion acquisition of German tech company Ngarro SE, announced in late-June.

The CFO emphasized that the acquisition is complementary, enhancing Persistent's skillset, reducing reliance on North America for revenues, and enabling expansion into new markets like West Asia and Japan. Persistent Systems reported a 13.7% increase in net profit to Rs 483 crore and a 29% year-on-year revenue growth to Rs 4,303 crore in the June quarter.